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4G Strategy: Successful operators

show how LTE can improve KPIs

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4G Strategy: Successful operators show how LTE can improve KPIs
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4G strategy: EE makes the most of its

first-mover advantage to show how
LTE can improve KPIs
23 October 2013
Paul Lambert
Executive summary

EE, along with other 4G leaders such as Verizon Wireless, AT&T and SKT, is defining and
shaping what it means to be a successful 4G operator, and, like those other operators,
provides a benchmark for other 4G operators, especially those yet to launch, to judge
their strategy by.
EEs 4G pricing strategy has been to target the high-mid to high end of the market
at launch and then evolve its pricing to a broader base of users. The key factors
determining this approach have been encouraging higher-spending users and early
adopters to sign up to tariffs priced at a slight premium at launch, and device
availability.
As the higher-spending users have been targeted, and as 4G device prices have come
down, EE has slightly reduced the prices of its 4G tariffs and/ or increased the amount
of data included in them. It has also expanded its 4G tariffs to a broader base first by
including shorter contract periods and then introducing prepaid 4G offers.
EEs bundling quality content and services into 4G tariffs is proving to be an effective
way to increase usage when combined with a quality network experience. The
operator says that subscribers that actively use its film and music content are much
less likely to churn, and much more likely to recommend EE to others.
The pricing of the other UK operators looks high in comparison with EE at the moment,
especially in light of its latest moves, and EES 4G rivals will need to closely evaluate
how likely their 4G rates are to encourage users to either migrate to them or join EE in
favor of its lower rates. The rival operators will need to concentrate on the segments of
their existing user bases that are most ripe for profitable migration from 2G/ 3G to 4G
or potentially lose subscribers to EEs more attractive offerings.

Overview
EE was the first operator in the UK to launch 4G, in October 2012, and held its position as sole
4G operator in the market until Vodafone launched in August 2013.
EE has been extremely effective in educating the UK market about what 4G is, signing up 4G
users and using its 4G network as a foundation to improve KPIs. It is one of the most successful
4G operators in the world, judged by its overall impact on the market and the effect its 4G
services have had on its KPIs. EE, along with other 4G leaders such as Verizon Wireless, AT&T
and SKT, is defining and shaping what it means to be a successful 4G operator, and, like these
other operators, provides a benchmark for other 4G operators, especially those yet to launch,
to judge their strategy by.
EE has been fully committed to rolling out its 4G network and signing up users without
diluting the potential value in the network by pricing services at a low level. The 4G network
rollout was the fastest in Europe in terms of coverage: It covered 10 cities at launch, increasing
this to 117 towns and cities by the end of September 2013.
EEs network now reaches over 30Mbps, which puts it among the fastest in the world. It had
one million 4G users by October 2013, 12 months after launch, which is around 10% of its
customer base a 4G net adds rate on a par with other aggressive 4G operators such as Verizon,
AT&T and SKT.
Broadly speaking, EEs 4G success can be attributed not only to being the first 4G operator in
the UK, but also to:

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Offering a truly 4G network experience.

Implementing an extremely effective pricing strategy.

2013 Informa Telecoms & Media

40

4G strategy: Etisalat sees 4G

smartphones as chief tool for
preserving a high-value edge, but
revenue increase is a tough prospect
25 July 2013
Ismail Patel
Executive summary

As a converged operator with an aggressive NGA strategy, Etisalat launched LTE in the
UAE in late 2011 with a theoretical maximum download speed of 100Mbps.
The operator is looking to target two segments: with 4G smartphones and tablets,
high-ARPU UAE residents and expats; and with dongles, short-term expats who do not
want a fixed line.
Etisalat competes with Du, which also offers 100Mbps LTE, in pricing and speed.
Neither operator seems to have a clear advantage, because their plans are very similar.
In terms of pricing, Etisalat by and large is only differentiating between 3G and 4G
when it comes to device sales, not data allowances or speed. Still, 4G take-up has not
exceeded expectations, with about 15,000 dedicated 4G subscriptions and 25,000 4Genabled smartphone subscriptions at end-1Q13.
Etisalat began offering 4G smartphones in December 2012, and the LTE opportunity
remains relatively untapped as Etisalat tries to figure out its retail and bundling
strategy for LTE handsets. Among 4G-enabled devices, it discriminates only with the
Samsung Galaxy S4, by charging a premium for access to LTE.
The operator should consider bundling mobile broadband with its superfast fixed
broadband, for differentiation purposes and to make the most of its fixed and mobile
assets, especially targeting those customers in its fixed-network footprint.
With most major urban areas of the UAE blanketed with advanced fixed and mobile
networks, it is high time for innovation that uses the capabilities of these networks,
including partnerships in add-on services and content justifying the high investment
in NGA deployments.

Overview
Etisalat launched LTE in December 2011 in the UAE, a few months after the first regional
launches in Saudi Arabia. When it first launched on nonsmartphone devices, the operator did
not differentiate between 3G and 4G pricing like in advanced LTE markets, such as the US
and South Korea meaning that essentially all customers are 4G subscribers if they have a
4G-enabled device. For LTE access on the Samsung Galaxy S4 handset, the company charges a
monthly service premium for postpaid users and a device premium for prepaid users.
The UAE is one of the highest-data-consuming markets in the Middle East, and its smartphone
penetration has grown 21 percentage points in the past two years, to 80% (see fig. 1), making
the market ripe for LTE networks, because their spectral efficiency is better than that of 3G.
And Etisalat recently boosted its theoretical 4G download speeds from 100Mbps to 150Mbps.

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2013 Informa Telecoms & Media

47

4G strategy: Global momentum to LTE

accelerates as successful strategies
emerge
28 October 2013
Paul Lambert
Executive summary

Over 80% of the operators responding to Informa Telecoms & Medias survey on LTE
launch strategies said that they believe that there is a viable business case to launch
LTE today; one-third said that they plan to launch LTE this year.
The main reasons given by the operator respondents pertain to gaining a competitive
advantage by launching LTE: Current networks dont offer sufficient capacity, users
want greater speeds and operators want to create new revenue streams using LTE.
Operators are seeing changes in consumer behavior, and the initial signs are that LTE
users are consuming more data than 3G customers: 28% of the operator respondents
to the survey are seeing an increase in data usage of 11% or more when a subscriber
migrates to 3G.
While the majority of respondents believe that not charging a premium for LTE access
is the best approach to LTE pricing, around a third believe that a 6-15% premium is
sustainable. Evidence to date indicates that operators can most successfully drive LTE
subscription uptake if they dont charge a premium over 3G services. Operators that
want to charge a premium for LTE will need to work out how they can increase the
overall value of the 4G subscriptions to justify a premium over 3G.
The majority of operators are in no hurry to launch either LTE-Advanced or VoLTE,
which suggests that 2014 will be another year of preparing for these technologies
rather than actual market launches.

Market status
To gain a view of the status of the worldwide LTE service launches and operators strategies
for positioning LTE in the market, Informa Telecoms & Media conducted a survey in 2Q and
3Q 2013. The survey focused on the key areas surrounding LTE launch strategies, including:

Timing of LTE network launches.

How best to position LTE in the market.
LTE network strategies.
Effect of LTE on KPIs.

The overall sample was 444 respondents, including board level executives, sales and
marketing managers and technical experts. The largest proportion (33.5%) of the respondents
are based in Europe, 23.4% in Asia Pacific and the rest fairly evenly split between the Americas,
the Middle East and Africa.
The first question 4G licensees need to address is when to launch LTE. Key factors influencing
this decision are:

How well are current networks coping with the demand for data?
How much competitive advantage can an operator gain from launching LTE?
Does a rivals LTE launch compel an operator to launch LTE?

The vast majority (83.4%) of the operator respondents believe that there is a viable business
case to launch LTE today; 32.5% said they plan to launch LTE this year. The main reasons
given by the operator respondents pertain to gaining competition advantage by launching
LTE: current networks dont offer sufficient capacity; users want greater speeds; and operators
want to create new revenue streams using LTE (see fig. 1).

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2013 Informa Telecoms & Media

72

Contents
4G strategy: Successful LTE operators show that increasing usage is key to improving
KPIs..................................................................................................................................... 1
4G strategy: Successful operators show how LTE can improve KPIs.............................. 3
Fig. 1 Global, LTE subscriptions by region, 3Q11-3Q13............................................................................................................... 3
Fig. 2: Global, number of LTE networks by region, 2Q13............................................................................................................4
Fig. 3: Top 10 countries worldwide by 4G penetration, 2Q13...................................................................................................4
Fig. 4: Top 20 LTE operators worldwide, by subscriptions, 2Q13............................................................................................. 5
Fig. 5: Key drivers for LTE networks launches and subs uptake...............................................................................................5
Fig. 6: LTE devices launched in 2013, by LTE mode, as at 2Q13.............................................................................................. 6
Fig. 7: Leading LTE operators, pricing approach............................................................................................................................. 7
Fig. 8: Netcom (TeliaSonera Norway), evolution of LTE price plans: Oct-10, Apr-11, Apr-12 and Sep-13.............. 8
Fig. 9: UK, Vodafone and EE monthly plans, Sep-13.................................................................................................................... 8
Fig. 10: US, AT&T and Verizon Wireless, each advertising that they offer the best 4G network............................ 10
Fig. 11: Vodacom scaling the network and device availability......................................................................................... 10
Fig. 12: EE expanding the network and the range of devices and evolving its pricing strategy......................... 11
Fig. 13: Verizon Wireless KPIs, 3Q11-2Q13.....................................................................................................................................12
Fig. 14: LTE-only service announcements, up to 3Q13..............................................................................................................13
Fig. 14: LTE-only service announcements, up to 3Q13 (cont.)............................................................................................... 14
Fig. 15: EE, 4G marketing, 3Q13..........................................................................................................................................................14
Fig. 16: Selected VoLTE deployments and plans, end-Sept 2013...........................................................................................15
Fig. 17: Global, LTE subscriptions, by region, 2013-2018......................................................................................................... 16
Fig. 18: LTE subscriptions in selected countries, 2013-2018................................................................................................... 16

4G strategy: Emerging Asia operators market LTE to high-end users but need to
evolve pricing models to make a return on investment.............................................. 19
Fig. 1: Asia Pacific, 3G as % of total subscriptions, key markets, 3Q12............................................................................. 20
Fig. 2: Asia Pacific, in-service and planned LTE networks, emerging markets................................................................20
Fig. 3: Bharti Airtel, Smart, Globe, LTE subscriptions, 2Q12 and 3Q12.............................................................................. 21
Fig. 4: India, LTE (Bharti Airtel) and DSL/FTTH (BSNL) price comparison......................................................................... 21
Fig. 5: Bharti Airtel India, LTE and 3G pricing comparison.....................................................................................................22
Fig. 6: Bharti Airtel, per-megabyte premium, 3G vs. LTE......................................................................................................... 23
Fig. 7: Philippines, Smart and Globe LTE and 3G pricing, Dec-12........................................................................................ 23
Fig. 8: Globe and Smart, per-megabyte premium, 3G vs. LTE................................................................................................24
Fig. 9: Bharti Airtel and Globe Telecom, additional LTE data-plan comparison............................................................24
Fig. 10: LTE Logos and branding..........................................................................................................................................................25
Fig. 11: LTE devices offered by Bharti Airtel, Globe and Smart..............................................................................................25
Fig. 12: Globe Telecoms LTE-smartphone portfolio....................................................................................................................25
Fig. 13: Bharti Airtels LTE value-added services...........................................................................................................................26
Fig. 14: Asia Pacific, key LTE networks launched in/planned for 2013..............................................................................26
Fig. 15: 2G-prepaid-to-LTE-postpaid migration plan................................................................................................................. 27
Fig. 16: LTE subscription forecast by region, 2013-2017.......................................................................................................... 28
Fig. 17: Asia Pacific, LTE subscriptions by country, 2013-2017............................................................................................. 28

4G strategy: AT&T focuses on LTE-network quality and coverage in competition for

US 4G leadership.............................................................................................................31
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Fig. 1: Data-speed comparison by data protocol......................................................................................................................... 31

Fig. 2: US, average monthly data traffic, Dec-09 to Dec-12....................................................................................................32
Fig. 3: US, smartphone penetration by operator, 1Q11-1Q13............................................................................................... 32
Fig. 4: AT&T, WCDMA and LTE as % of total subsciptions...................................................................................................... 33
Fig. 5: US, LTE-plan comparison, unlimited talk, text and 2GB of data with iPhone 5...............................................35
Fig. 6: Example of AT&T marketing...................................................................................................................................................35
Fig. 7: AT&T, subscription trend by technology, 2Q11-1Q13..................................................................................................36
Fig. 8: AT&T LTE SWOT analysis.......................................................................................................................................................... 37

4G strategy: EE makes the most of its first-mover advantage to show how LTE can
improve KPIs.................................................................................................................... 39
Fig. 1: Comparison of EE's 24-month pricing plans....................................................................................................................41
Fig. 2: UK operators 4G price comparison, Oct-13...................................................................................................................... 41
Fig. 3: EE 4G network marketing, Oct-13........................................................................................................................................ 42
Fig. 4: EE KPIs 2Q12-2Q13......................................................................................................................................................................43

4G strategy: Etisalat sees 4G smartphones as chief tool for preserving a high-value

edge, but revenue increase is a tough prospect........................................................... 46
Fig. 1: UAE, smartphone penetration, 1Q11-1Q13..................................................................................................................... 47
Fig. 2: UAE, operator postpaid market share, 1Q13................................................................................................................... 48
Fig. 3: Etisalat UAE, mobile coverage by technology..................................................................................................................49
Fig. 4: Operator 4G dongle stand-alone prices..............................................................................................................................49
Fig. 5: Etisalat, Du, monthly data pricing, per gigabyte...........................................................................................................50
Fig. 6: Etisalat iPhone 5 pricing........................................................................................................................................................... 50
Fig. 7: Etisalat 4G subscriptions, 4Q11-1Q13................................................................................................................................ 51
Fig. 8: Etisalat LTE SWOT analysis...................................................................................................................................................... 51

4G strategy: Sprint supercharges LTE with launch of Spark tri-band services as US

races to LTE-Advanced.....................................................................................................54
Fig. 1: Sprint Spark marketing.............................................................................................................................................................. 54
Fig. 2: Sprint's enhanced spectrum position...................................................................................................................................55

4G strategy: Verizon Wireless rides aggressive LTE strategy to stellar results but
needs to innovate to retain US and global leadership................................................. 57
Fig. 1: US, mobile broadband subs as % of total mobile subs, 1Q11-4Q12...................................................................... 58
Fig. 2: US, smartphone connections and penetration, 2011-2017...................................................................................... 58
Fig. 3: Verizons four strategic network platforms...................................................................................................................... 59
Fig 4: Verizons LTE business model................................................................................................................................................... 60
Fig. 5: Verizon Share Everything plans............................................................................................................................................. 61
Fig. 6: Verizon's LTE marketing.............................................................................................................................................................62
Fig. 7: Verizon Wireless selected service changes, Nov-09 to Apr-13.................................................................................. 63
Fig. 8: Verizon Wireless subs by technology, Dec-10 to Jun-13............................................................................................. 64
Fig. 9: US, LTE subs by operator, Dec-10 to Jun-13 (mil.)..........................................................................................................64
Fig. 10: Global, top 15 LTE operators by subscription count, end-Jun 13......................................................................... 65
Fig. 11: US, market share of top four mobile operators, 2009-2012...................................................................................65
Fig. 12: US, monthly ARPU of top four mobile operators, 3Q10-2Q13..............................................................................66
Fig. 13: Verizon Wireless selected results, 2010-2012................................................................................................................66
Fig. 14: Verizon Wireless LTE SWOT analysis................................................................................................................................. 66

4G strategy: Vodafones pricing puts faith in the value of premium content ............ 69
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2013 Informa Telecoms & Media

UK, Vodafone and EE monthly plans, Aug-13.............................................................................................................................. 69

4G strategy: Global momentum to LTE accelerates as successful strategies

emerge............................................................................................................................. 71
Fig. 1: Why is now the right time to deploy LTE?........................................................................................................................ 72
Fig. 2: How can operators best differentiate LTE from 3G? (Please choose two options)........................................... 72
Fig. 3: Which service or application is driving/ will drive the greatest volume of traffic on LTE networks?
(Please choose one option)......................................................................................................................................................................73
Fig. 4: If you have launched LTE, what increase in ARPU are you seeing when a subscriber migrates to
LTE?.....................................................................................................................................................................................................................73
Fig. 5: If you have launched LTE, what average increase in LTE data usage are you seeing compared with
3G?......................................................................................................................................................................................................................74
Fig. 6: What variant of LTE do you intend to deploy?...............................................................................................................74
Fig. 7: Which spectrum bands do you intend to use to deploy LTE? (Tick any that apply)....................................... 75
Fig. 8: In your view, what is the likely future role of Wi-Fi for operators deploying LTE in the next two to three
years?.................................................................................................................................................................................................................75
Fig. 9: What percentage price premium do you think is right for LTE?.............................................................................76
Fig. 10: Do you plan to offer any 4G-only content free over LTE to encourage uptake?............................................76
Fig. 11: When do you expect LTE-Advanced to be deployed?................................................................................................ 76
Fig. 12: When do you plan to go live with VoLTE services?.....................................................................................................77
Fig. 13: Do you think its possible to charge a premium for LTE voice?.............................................................................77
Fig. 14: When do you expect LTE small cells to be deployed?................................................................................................78
Fig. 15: Where do you expect widespread commercial public-area LTE small cells to be deployed first?............78
Fig. 16: Operators are better prepared to offer roaming services across LTE networks in 2013 compared with
2012................................................................................................................................................................................................................... 79
Fig. 17: What do you see are the main barriers to LTE roaming?........................................................................................79
Fig. 18: Do you plan to extend 2G/3G roaming agreements to 4G, or strike new agreements?............................ 80
Fig. 19: A hubbing approach is better for LTE roaming compared with a bilateral approach.................................80

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